What's Net Neutrality Regulation? I. Summary: Net neutrality is the most important techcom policy issue for investors, policymakers and consumers to understand for the rest of the decade. It’s a grand clash between dueling visions of how the Internet and the broadband economy should best evolve going forward. For consumers and policymakers, it is about which policy approach is best to achieve a full access, competitive, and innovative Internet? For technologists, it’s a network design debate: should government mandate a neutral end-to-end network design, or should competition drive network design? For techcom investors, it is about which business models will be free to innovate, differentiate, grow and capture value? II. Comparing Net-Neutrality Definitions: Comparing definitions brings focus to the net neutrality debate. Practically. Net neutrality is the effort by ecommerce companies to get Congress to pass a new law or get the FCC to impose new broadband regulations to require all Internet traffic be treated equally. Net neutrality came to the forefront as a result of deregulatory FCC rulings, which the Supreme Court upheld, that cable modems and DSL were competitive, unregulated “information-services.” That means broadband telecom and cable networks are not subject to regulation of price, terms or conditions. The FCC defined: net neutrality as consumers not being denied access to the legal content, applications and devices of their choice, in a non-binding policy statement 8-5-05. Ecommerce companies have defined: “Net neutrality as the principle that the Internet should remain open and interconnected – free from gatekeepers over new content and services.” (3-06 letter to the House Energy and Commerce Committee.) Competitive broadband facilities define: net neutrality as unnecessary and destructive economic regulation that would: derail the evolution of a full access, competitive and innovative Internet for consumers; and reverse the Government’s fifteen-year policy to commercialize and not regulate the Internet. III. Net Neutrality vs. Net Competition: Contrasting the two approaches also brings focus to the net neutrality debate. Regulation vs. Competition. Net neutrality proponents believe that prophylactic broadband equal treatment regulation is needed to prevent Internet gatekeepers from potentially favoring selected content, applications or devices. At its core net neutrality is about dictating an end-to-end network design for broadband providers and prohibiting broadband networks from offering different customers different deals. In contrast, net competition proponents believe that vibrant competition is more than sufficient to ensure consumers are not blocked from access to the legal content, applications and devices of their choice. In the competitive broadband market, the overwhelming economic incentive is to satisfy consumers not antagonize them. More Government-control of Internet vs. free market Internet. At its core, the net neutrality debate is also a philosophy system debate. Can government or free-market forces best pick: winners and losers; technologies that succeed; and/or what Americans want to buy? In other words, are decisions core to a free and open Internet best made by: political and regulatory processes; or contemporaneously by the many tens of millions of Americans that use the Internet and vote with their wallets everyday? Net Design Rigidity vs. Flexibility. Net neutrality proponents believe that mandating networks operate neutral end-to-end network designs, will encourage maximum tech innovation at the edge of the network. What they call a “dumb” network merely connects devices and is neutral to the needs of applications or content running over the network. In contrast, net competition proponents believe that encouraging competition between many “smart” interoperable networks gives consumers the most choices and is also the best way to enhance the Internet’s security and privacy. Moreover, they question how a law that specifically limits innovation and differentiation by the over 2,000 broadband telecom, cable, and wireless companies in the U.S. -- to encourage innovation for companies at the edge of the network – is overall pro-innovation. Price Regulation vs. Consumers Freedom to Choose. Common carrier telephone regulation long required equal price, terms, and conditions for interconnection. Net Neutrality proponents believe that broadband should operate in a similarly regulated way. They believe this would prevent networks from dictating how their networks are used or from favoring certain websites over others -- so that innovation at the edge of the network could flourish. Net competition proponents view the regulatory approach as outdated and overtaken by events -- competition. Applying monopoly regulations to a competitive market would have the nonsensical outcome of outlawing the development of choices for consumers through competitive innovation and differentiation of networks. The purpose of competition is creating choices for consumers and encouraging innovation; the purpose of regulation is sameness.